For people in business, often their largest debt is a tax debt to the ATO. Tax debts can easily get out of hand and become unmanageable. One option for a company with a tax debt is to appoint a Liquidator, but a major consideration before doing this is, will liquidation avoid you being liable for your company’s tax debts?
When are you liable for a company’s tax debts?
You can be liable for a company’s tax debts, including for PAYG Tax and GST through the ATO’s director penalty provisions. These provisions can also make you liable for your company’s unpaid superannuation.
You can be liable for PAYG Tax and GST if you have received a 21-Day Director Penalty Notice from the ATO claiming these debts and the notice has expired. For this to happen you have to have received a 21-Day Director Penalty Notice and HAVE NOT placed your company in liquidation or voluntary administration within 21 days of the date of the Notice.
However, the ATO can make you liable for your company’s PAYG Tax and GST debts even after your company is in liquidation. And this is how:
The ATO can issue you with a Lockdown Director Penalty Notice after your company has been placed in liquidation if you have failed to pay PAYG Tax or GST and you haven’t lodged your BAS within three months’ of the BAS being due. For example you will be automatically liable for your March Quarter PAYG Tax and GST if you don’t lodge your March BAS by 28 July, being three months after it is due for lodgement.
Are there any other risks with liquidation?
Yes, there can be other risks for a director associated with putting a company in liquidation. These can include risks of claims for insolvent trading or other liquidator recovery actions or claims against a director for personal guarantees. The best thing to do before you put your company into liquidation is to get advice about all risks associated with this, including risks of being liable for tax debts and other risks of liquidation.
Contact us for Assistance
If your company is having difficulty paying its debts, then you should urgently get professional advice, including about the risks of being liable for a company’s tax debts. And TAX DEBT SOLVED can help. So, in these circumstances please contact us for a free, no-obligation consultation, contact us here.